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Vaughn Palmer: NDP loan fund another blank cheque for B.C. cabinet ministers

Opinion: The NDP offers a $400-million 'strategic' loan fund after a $1.5 billion PST jump for businesses. Who gets loans is up to cabinet

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VICTORIA — Premier David Eby brushed aside concerns this week that his decision to apply the provincial sales tax to services used by business will be counterproductive to the NDP government’s drive to improve investment and economic growth.

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“We made, frankly, a difficult decision to add the PST to accounting and other professional services,” said Eby. “It is an additional burden on the business community, but there are benefits that flow to the business community through the budget as well.”

Finance Minister Brenda Bailey went so far as to argue that the tax change would benefit business in a roundabout way.

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“We’re doing it not because we want to. We’re doing it because we need to,” said Bailey. “We continue to protect and expand health care. We continue to invest in education.

“It’s good for the business community. Can you attract people when they can’t find a doctor? No. Can you attract people when their kids aren’t getting what they need in schools? No. We proudly stand by this budget. It also helps the business community.”

Both were responding to Tuesday’s call from a dozen and a half business organizations for the government to cancel plans to apply the seven per cent sales tax to inputs essential to business expansion, investment and growth.

“This government does not have a revenue problem. It has a spending problem,” said Bridgitte Anderson, CEO of the Greater Vancouver Board of Trade and host of the  news conference.

“At a time when we are facing tariffs, economic uncertainty and higher borrowing costs, layering on the new PST makes B.C. a harder place to build and to export from.”

“Competitiveness comes down to cost, speed, and certainty. This measure pushes all three in the wrong direction. It raises input costs, slows decisions to hire and invest, and adds administrative burden for thousands of businesses.”

The business leaders provided Eby with an easy out on one point. They indicated a preference for value-added taxation like the abandoned harmonized sales tax, or HST, over the tax-atop-tax variation that is the PST.

“I understand there’s a call to reinstate the HST, ” said the premier. “The answer is no. Reinstating the HST is a non-starter for us.”

On a positive note, Eby pointed to government’s creation of a $400 million account to underwrite “strategic investments” in selected industries.

“That is going to anchor major investment in B.C. and help us participate in the federal government’s commitment to spend five per cent of GDP on biodefence, marine defence, shipbuilding, and other investments,” Eby told reporters.

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“Also in the budget legislation are the tools that allow us to not just write a cheque to a company to locate in B.C., but actually to participate with the company on behalf of British Columbians as that company delivers profits and opportunity. That’s through things like loans, through taking equity in the companies, and also through profit participation.”

Eby insists that the money won’t be available to just anybody.

“Projects still have to stand on their own, they have to be profitable. They need a solid business plan. They’ll have to qualify. They’ll need strong partnerships like the federal government and deliver real economic value for British Columbians.”

None of those guarantees were spelled out in the enabling legislation for the fund, introduced last week along with this year’s budget.

When passed by the NDP majority, the legislation will allow the finance minister to tap the $400 million account to provide grants, make loans, and acquire equity in “eligible recipients” in the realm of “strategic investments.”

“Eligibility” and “strategic investments” will be defined at a later date by the treasury board committee of the cabinet, which will also have the power to oversee any payouts, guarantees and terms.

The NDP cabinet members on treasury board are given a free hand to define eligibility and strategic investments and dispose of the $400 million largely as they see fit.

The legislation says they “may make different regulations for different eligible recipients, strategic investments, purposes or things, or different classes of eligible recipients, strategic investments, purposes or things.”

The cabinet committee can also apply approvals retroactively to agreements by current and former NDP jobs ministers going back eight years, to April 1, 2018.

In short the bill, No. 3 on this year’s legislative agenda is another blank cheque, typical of this NDP government and an opportunity for lobbyists.

Given this government’s preference for announcing funding when flanked by recipients who validate the wisdom of NDP decisions, you can think of this as a validator-recruitment act.

The expansion of the PST is budgeted to raise about $1.5 billion over the next three years, much of it from taxing services used by businesses large and small.

The New Democrats will skim off $400 million and return it to “eligible” recipients, meaning those that agree to play ball by standing on public platforms to praise the government in exchange.

Good news for those who get the nod from the cabinet for a piece of action. Less so for the businesses and other taxpayers forced to help top up the $400 million fund.

vpalmer@postmedia.com 

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